A recent Massachusetts Superior Court case shows how construction law will bend a bit to accommodate the enforcement of a mechanic's lien against a construction project.

Property Under Lien Suspiciously Transferred to New Entity

The case, Timberline Enterprises, Inc. v. Onyx Development & Management, et al., involved a building materials supplier that allegedly went unpaid for services provided to the project owner. After not receiving payment, Timberline Enterprises put a mechanic's lien on the property.

However, weeks before Timberline had perfected its lien against the project, the owner, Onyx Development had sold it to another corporate entity, 143 Hunting Street LLC, for a dollar.

In August, 2024, when Timberline timely perfected its lien against the property by recording the Notice of Contract with the Norfolk County Registry of Deeds, that lien listed Onyx as the owner and Onyx received a copy of it. 143 Hunting Street, a corporation that had only been created days earlier, then sought to have the lien discharged because it was not a party to the construction contract.

The Superior Court judge refused to discharge the lien against the property, and granted Timberline leave to amend its complaint to include claims for the fraudulent conveyance of the property.

Ruling Shows Strict Rules on Liens Will Not Allow for Fraud

Typically, the filing of a mechanic's lien is a strict process. It has to follow the requirements of Massachusetts General Laws Chapter 254 to the letter. The rules are tight, and any noncompliance will result in the lien being unenforceable, leaving the unpaid lienholder unsatisfied.

This is good news for property owners who do not want their projects encumbered by one.

Timberline Enterprises, however, highlights how Massachusetts construction law will not allow the strictness of this process to be abused. In this case, the property owners certainly appeared to be using the rigid requirements of the lien process to stiff their supplier. By giving the project away right before the lien could be perfected and then cheekily claiming that the new owner was not the one who did not pay the supplier, the property owner really seemed to be trying to abuse the law.

This case shows that there are other aspects of the law that forbid this sort of thing, and that judges are willing to turn to them.

Massachusetts Construction Lawyers at the Katz Law Group

Whether you or your company is the project owner trying to keep the property unencumbered by a lien, or a building supplier, contractor, or subcontractor trying to make sure you get paid, the construction lawyers at the Katz Law Group can help. Over four decades of practice in the central Massachusetts area, our lawyers have handled hundreds of mechanic's liens.

Call our law office at (508) 480-8202 or contact us online to get started on your case and advance your needs and interests.